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Mon, August 3, 2009 National Rural Utilities Cooperative Finance Corporation (NRUCFC): Update: Electric Distribution Cooperatives Report Strong Fin
HERNDON, VA--(Marketwire - August 3, 2009) - National Rural Utilities Cooperative Finance Corporation ([ National Rural ]) (
"The nation's electric distribution cooperatives again reported strong financial results. They did a good job of piloting their systems through difficult economic waters in 2008. Revenue kept pace with higher costs and margins remained strong, keeping financial ratios stable," said National Rural Governor and CEO Sheldon C. Petersen.
The KRTA report is based on data submitted by 819 distribution cooperatives for the year ending Dec. 31, 2008. Petersen identified three major findings in the data:
-- Revenues kept pace with rising fuel costs in 2008. Total operating revenue per kilowatt hour (kwh) sold shows a nearly 6.5-percent increase compared with 2007, an indication that distribution cooperatives are taking the necessary steps -- using fuel adjustments or increasing rates -- to meet expenses. During 2008, distribution cooperative wholesale power and other costs increased, with power costs per kwh sold increasing 7.2 percent over the prior year while total operating expenses per kwh sold went up 2.9 percent. "Overall, revenue increases were sufficient to overcome rising costs," Petersen said. -- Primary financial ratios -- such as equity as a percent of assets, times interest earned ratio (TIER), modified debt service coverage (MDSC) - and aggregate cash and cash equivalent numbers remained stable. The equity as a percent of assets median ratio for 2008 remained healthy at 40.62 percent. TIER was up slightly at 2.27; this is well above the 1.25 TIER required by systems that borrow from the USDA Rural Utilities Service. MDSC, National Rural's primary coverage ratio, was 1.82, well above the 1.35 level required by National Rural. In addition, the aggregate cash and cash equivalents for distribution cooperatives totaled a strong $2.8 billion at Dec. 31, 2008. "The primary financial ratios and total cash levels remained healthy and stable," Petersen said. -- Median growth -- in terms of both consumers and kwh sales -- remained positive in 2008, and consumers were paying their bills on time. The consumer growth rate -- the number of new consumers -- was nearly 1 percent for distribution cooperatives. As a result, the consumer growth rate for distribution cooperatives remained nearly double that of municipal and investor-owned utilities, according to information from the U.S. Energy Information Administration. While electricity demand fluctuates in the short term in response to business cycles, weather events and prices, the median growth rate for kwh sales also remained positive in 2008 at 1.22 percent. Although the United States was in recession in 2008, distribution cooperative consumers continued to pay their bills. According to data from the KRTA information, the number of accounts receivable written off as a percentage of operating revenue was only 0.18 percent -- unchanged from the previous year. Moreover, the number of accounts receivable past due more than 60 days as percentage of operating revenue actually declined slightly from the prior year to 0.17 percent.
Other key findings in the 2008 financial highlights of electric distribution cooperatives include the following KRTA composite numbers:
-- The aggregate total megawatt hour (mwh) sales of all 819 rural electric distribution systems grew 1.91 percent in 2008 to reach 396,832,711 mwh. -- In 2008, total mwh sales by class of service showed residential consumers at 56 percent, commercial accounts at 19 percent, industrial accounts at 20 percent, irrigation at about 2 percent and other at about 2 percent. -- Distribution cooperatives added a total of 267,042 new residential households in 2008. -- Distribution cooperatives' gross utility plant investment totaled more than $78 billion in 2008.
The following median numbers also are included in the 2008 KRTA data:
-- Total operating revenue per kwh sold in 2008 increased to 97.15 mills. (One mill equals one-tenth of one cent.) -- Total operating expenses per kwh sold in 2008 rose slightly to 19.60 mills. -- Total margins per kwh sold in 2008 rose slightly to 6.13 mills.
National Rural is a cooperative that serves the nation's rural utility systems, the majority of which are electric cooperatives. With approximately $20 billion in assets, National Rural provides its member-owners with an assured source of market-priced capital and financial products and services.
